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6. Liquidate worthless mortgage backed securities, claim as investment loss, beg government for bailout.
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6. Liquidate worthless mortgage backed securities, claim as investment loss, beg government for bailout.
I learned in a tax CPE class last year that if you don't know which charities you want to contribute to right away, Fidelity has a nice product called the Charitable Gift Fund.
With this, you are generally able to contribute to this and take your deduction right away for 2008 then grant your balance in the funds to the charitable organization(s) of your choice in 2009.
However, consult a tax professional before you do this as this comment is intended to be informational only and should not be considered as tax advice.
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I have it on good authority that opening a center for wayward kitties is tax deductible.
Sadly, adopting pig-like children is not. Lessons learned.
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Related to what yajjo is saying, Iv been wondering if I should claim the losses I made on the market this year (about 35% of 1 years worth of saving) to lower my taxes. From what I understand, that means I'll have to pay capital gains on any rebound it makes in the future, but come on...is anybody expecting the Dow to jump back up to 13000 in the next couple years?
@sled_dog: Correct, you haven't \"lost\" anything unless you actually sell it at a loss. Losses can count against capital gains and, futher, can reduce your tax burden by up to a couple of grand per year. (IANAA)
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@DrStarkweather: If you have \"real\" losses (meaning you actually sold something and lost $ between the purchase and sale price), then of course you should claim them. I am.
If you are asking, \"should I sell at a loss to make them 'real'\", then I have no idea. Up to the taxable limit it may make some sense (esp in the case of real garbage stocks-- strengthening your portfolio by getting rid of perennial losers is always a good idea), but it really depends on what you have and where.
That's a decision to make with an advisor/accountant, not from Consumerist/internet posters.
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Drug dealers, $50B Ponzi scheme architects and child pornographers across the US silently weep at their not being able to add anything constructive to this thread...
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@Trai_Dep: Cheer up. There are plenty of threads you can contribute to ...
(sorry you left yourself wide open for that)
is it just me or is #5 ridiculous. your lowering your tax this year but increasing it for next year (unless your smart enough to remember to do it again).
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@captainpicard: A valid point, but if it will nudge you down into a lower tax bracket it might be worthwhile.
@captainpicard: Not so. If you expect your income to be higher this year than next year (let's say, because you were laid off), it'd be wise to offset more taxes this year than next, since next year you'll be paying less in taxes anyway.
Since we're in a down economy, this would be a great time to try to do an extra mortgage payment this year, to hedge your bets about lower compensation next year.
sorry for the multiple posts but if your going to do #5 for mortgages you might as well do it for student loan payments as well
@captainpicard: The point is to keep you out of a higher tax bracket. This makes a lot of sense if you're teetering on the line for the AMT tax for example.
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With software, it's usually good to itemize even if you don't meet the Federal standard deduction...because most STATES have much lower standard deductions and you stand to benefit there.
IIRC, my wife and my itemized deductions are about 2x the Federal standard deduction, but like 6x the state deduction (mostly through charity). With software, you only have to enter it all once, save for any specific details the state might want.
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@The Name's Ash78, Housewares: Sound advice if you live in a state with a state income tax (I live in FL, so...)
@CountryJustice: Ahhh, my native land, where retirees dominate politics and policy (and property taxes are considered sodomy) :D
Most states do have income tax, so I was trying to be general and broad there.
Holiday Bonus?
What holiday bonus??
Whats a bonus?
Last year it was a $10 coffee card this year it was a whole lotta nothing!!
@verucalise: I got a DD card last year from work. Great gift to someone eating healthy and who doesn't drink coffee.
5. Make An Extra Mortgage PaymentMake your January '09 mortgage payment now and deduct its interest this tax year.
This makes no sense. The bank is not going to charge you 13 months of interest because you made a payment. The entire payment will go towards paying down the balance (not a bad thing, but no tax benefit from it). The interest won't be deductable until it is both charged by the bank AND paid by the taxpayer.
@SusannaArcesius: My bank always charges interest when a mortgage payment is received. I could make 3 mortgage payments in one month, and as long as they are the full amount or higher, I will get charged the expected interest.
If it's a simple interest loan, and not a traditional mortgage, then no, you won't get charged extra interest if you make an early payment at the end of 2008.
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@SusannaArcesius:
This depends on how the loan is set up. My bank assesses the interest as of the date the payment is received. Assuming they received the December payment on 12/1 and the January payment on 12/29, the 12/29 would have 28 days of interest accrued (and paid in 2008).
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Christmas bonus. What a nice, antiquated, never experienced by me perk.
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Make your January '09 mortgage payment now and deduct its interest this tax year.
That's stupid advice.
If you're going to pony up the money for an extra mortgage payment. It's better to apply the entire payment to the principal.
Making a mortgage payment early so that you can pay the interest early to get a tax writeoff on said interest is simply dumb.
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here comes the math, YMMV depending on how deep into your loan you are. Not applicable if you don't actually have the money lying around to make two payments in December plus another payment in January.
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Assumptions
$300,000 loan
30 years
5% rate
Let's say you just got this loan in Jan of 08. The interest on your Jan 09 payment would be $1,233.13.
So you deduct that on your 08 taxes and get a fraction of it back. (or, if you do your taxes right, you shouldn't get anything back, but would pay less in to taxes month over month).
That same $1,233.13 payment applied to the principle would save you $3982.95 over the lifetime of the loan and result in you paying the loan off in 29.75 years vs 30 years.
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@lordargent: I think you're missing the point. Yes, of course it's going to save you money in the long run to apply extra money to principle early. No one is arguing that you won't (although you might lose out on investment value if you factor in opportunity costs, though that's a different argument). I think this is more talking about people who don't HAVE the extra money to pay down principle and make an extra mortgage payment. Just paying a bit early (maybe only a few weeks) could save you taxes even if you don't have the extra money (or if you already DID make an extra payment). So it's not \"stupid advice\".
I realize that you disclaimed what you were saying, but I think you're totally missing the point here. Paying down principle and moving up a planned payment to save on taxes are not mutually exclusive goals.
@johnva: I think this is more talking about people who don't HAVE the extra money to pay down principle and make an extra mortgage payment.
Think it through all the way.
Paying your Jan 09 payment in Dec 08 means you get 13 tax deductible interest payments in 2008.
But then, in 2009, you end up with 12 tax deductible interest payments.
You already paid the Jan 09 payment/interest in Dec 08, and can't use that as a writeoff in 2009.
Then you pay and write off your Feb-Dec 2009 interest payments (11 payments total)
Then, you pay and writeoff your Jan 2010 interest (add 1 payment).
That still leaves you at 12 mortgage/interest payments per year.
Hence, why I consider it such a dumb idea.
Yeah, you get a couple of extra bucks worth of writeoffs one year, but you lose those writeoffs in following years unless you prepay the January payment every December (and even doing that just puts you back to a regular 12 payment per year thing).
/Also, I'm assuming that anyone that can afford to make a mortgage payment a few weeks in advance could instead skim some of that money off to prepayments. Even an extra $100 direct to principle would help.
@lordargent: But sometimes people have different tax situations from year to year. It can be advantageous to move the deduction around.
@InfiniTrent: And how many people who make that much actually give 10% of their pretax income to a church? It's astounding to me that anyone would give them that much.
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@johnva: I know several people who use the church for political and social contacts. The job and personal available through church networking is actually quite impressive. A %10 tithe is worth the doubling of income potential.
Also my holiday bonus was a shot of bailys.
And if you are once again screwed and have to pay the AMT? That's what the Bush tax cut got us. A hike to AMT and no $600 check.
Here is the one problem with all these wonderful ideas....they require you to have money to spend right now....once again...the rich get to get richer...and yes I am bitter.
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Or have a baby :) (I'm due on Christmas Day and desperately hoping this child makes his debut in 2008 so we can get the tax break!)
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@Sanveann:
Wouldn't you rather hold out until the 1st be 'first baby of the new year' and get your picture in the paper and all the free diapers and stuff?
i am willing to impregnate as many high tax bracket single women that want to get a leg up on 2009 tax year.
ps
i don't have good swimmers (dog paddlers) so the earlier we start the better chance you will have of getting that extra deduction.
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@farscape7: You know the sex really wouldn't be worth it, YOU don't get to keep the baby and have them pay child support, dummy!
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Remember kids, itemizing is only time/energy-worthy if your donations surpass the standard deduction. If they don't you're just hurting yourself.
(IANAAccountant, so I could be way wrong here.)
@CountryJustice: Well, you aren't hurting yourself, other than wasting time. You're welcome to itemize regardless, but if you have less than the standard deduction most tax software will tell you and give you the standard one (and who does their taxes by hand these days?). That being said, if you have a mortgage, or student loans, or give to charity on a regular basis (say weekly/monthly church contributions) you will almost certainly be well over the standard deduction.
\"holiday bonus\"
DOES NOT COMPUTE